A smart guess gets products in the bag

Anneli Knight

Being open to change is important for every business, but imagine having to design your products by guesswork.

In September, while thousands of people were queuing outside Apple stores awaiting the release of the iPhone 5, the Sydney-based founders of STM Bags, Adina Jacobs and Ethan Nyholm, had a bit more to worry about than elbowing through their ways through the store's large glass doors.

"We had to wait with the rest of the world,” says Jacobs, head of product design. "We did a very small product run (before the release) – and this year the risk paid off.”

All 20 staff in STM's Sydney and San Diego offices keep an eye on technology rumour websites to gauge market expectations.

"There are tonnes of people who makes it their life's work to speculate what Apple is doing – and we develop products based on the most common information that comes through,” Jacobs says.

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"When we realised we had guessed correctly, we ramped up production to get as many products out as quickly as possible.”

Technology has changed rapidly since Jacobs, 38, started the business 14 years ago with Nyholm, now 43. The two were colleagues at Sydney retail chain Hound Dog. At the time, Nyholm went looking for a laptop bag that he could throw over his back to ride to uni, but couldn't find anything suitable.

"He bought a padded envelope from the post office and put it in his backpack, and he thought there should be a better solution,” says Jacobs.

Nyholm approached Jacobs, who had worked as a buyer and in product design, and proposed the idea of starting a business, which they both worked on part time for two years before making the leap to full time.

The early products were predominantly laptop bags – "cut and sew products”, says Jacobs. However with the creation of smartphones and tablets, the shift has been towards a rise in moulded protective products, with the business branching beyond Apple to include Sony and Samsung compatibility.

As well as the shift in product focus, the two entrepreneurs have also transformed their business by employing experts.

"Every year has been a massive year, every year we've had growth ... it's been such an adventure it's unbelievable – but the last three years has been the biggest change in the way we've done things," says Jacobs.

"We had the funds to be able to bring in outsiders – people who are experts at what we do.”

The shift meant that STM could employ in-house graphic designers rather than freelancers, and most significantly, add two staff with expertise in the US market – one in sales and one in marketing – and this helped drive the global business strategy.

The two US staff have joined the two founders to create a core strategic team.

"We speak almost every day and twice a year we put everything else out of our minds, get out of the office, to nut it all out and focus on it,” says Jacobs.

More than half of STM's products are now distributed globally – with 40 per cent sold in Australia, 40 per cent in the US, and 20 per cent split between the UK and Asia.

Co-founder Nyholm, who heads up the strategic side of the business, says the focus for STM is now on expansion throughout Asia - particularly Vietnam, where many of their products are manufactured, and Thailand – and this is presenting a new series of challenges.

"We often talk about Asia as a whole, but each country is different. It's about working in each of those countries, understanding the culture in each of those countries,” he says.

Nyholm says it is important to spend time understanding the culture and needs of people in places where you plan to sell your products, as subtle differences can affect the size and style of products.

"People commute a lot more on a lot more crowded trains (in Asia), so bags need to be narrower, and if you take a big backpack here (in Australia) it will look ginormous on Asian people,” he says.

Clear communication on packaging has also been a key to planning for success in Asia.

"You have to be clear in how you communicate – simple stuff such as language and how it is displayed can have a huge impact in how it succeeds in that country,” he says.

Being comfortable with rapid change is crucial to the STM business, Nyholm says.

"We work in one of the quickest changing environments and basically most of it is out of our control. If you don't enjoy that change and uncertainty then you have a problem, it makes it very difficult.”

And while many tech enthusiasts lose sleep over the excitement of a new technology release, the founders of STM work hard to keep their cool.

"You have to be able to sleep at night – it's the ability to switch off. When there's so much on the line it's often very difficult to do, but you have to be able to do that," says Nyholm.